SP Angel noted that vanadium prices have jumped in China and Europe due to a shortage of available material.
“We are struggling to see how the market may supply demand for vanadium in the next two years and we feel vanadium prices should settle at a higher price level than previously envisaged for the longer term,” the broker said.
SP Angel expects demand to outstrip supply, pushing up ferro-vanadium prices to US$85 per kilogram (kg) for 2018, 2019 and 2020 and to US$55 per kg for 2021 and US$45 per kg for 2022 and thereafter.
Bushveld owns a 74% stake in Vametco, a vanadium open pit mine in South Africa.
In an update last week, Bushveld said it would push ahead with the expansion of its Vametco vanadium plant to take advantage of soaring demand for the steel additive.
Vanadium prices increased 24% over the quarter to September to US$85.8/Kg and have risen by 137% over the past 12 months.
“Our valuation for Bushveld Minerals rises to US$1.6bn assuming an 8% discount rate and a long-term exchange rate of ZAR14/USD or 90p/s on our new vanadium price and production rate assumptions,” SP Angel said.
“We assume production rises to 10,000 tonnes per annum in 2023.”
Shares jumped 6.1% to 43.50p in late morning trading.